How many ad networks can mobile support? Are we heading for a shake-in/shake-out? And, if so, what capabilities will likely separate the winners from the also-rans?

These are just some of the key questions that came up during interviews with ad network executives at Mobile World Congress (MWC), and in a string of recent phone briefings. It’s also a line of questioning I hope to pursue at ThinkMobile, and Meet the Mobile Ad Networks, a panel led by Steve Smith with guest speakers Steven Rosenblatt, VP of Advertising Sales, Quattro Wireless; Eric Eller, Senior Vice President, Client Solutions, Millennial Media;  Patricia Clark, Regional VP of Sales, 4INFO; Paran Johar, CMO, JumpTap; Brian Murphy, Eastern Regional Sales Director, AdMob; and Robert Walczak, CEO & Founder, Ringleader Digital. It’s going to be a great session, and I’ll be back with my observations after the event.

BTW: Steve is a must-read columnist at MediaPost. Yesterday’s post, which recounts an experiment (a random click through mobile ads) and the user experience (disappointing and even frustrating), should be mandatory reading at ad agencies and networks everywhere. A key takeaway: “The system still is clogged with some crap even at branded media sites. Of course there are still dancing mortgage celebrants on CNN’s homepage, so we can’t fault mobile too much. But clicking on a mobile ad is an iffy thing. Mobile users don’t know yet what to expect, so if the publishing brand can ensure quality advertisers with quality end-user experiences, it elevates both the ads and the content.”

Steve’s column and my own observations lead me back to the key questions: How do the dedicated mobile ad networks fit in the game, and how will they differentiate? I caught up with Zaw Thet, CEO of 4INFO, the 800-pound gorilla of mobile messaging, and the company that Nielsen identified as the largest SMS content provider in North America for 4Q2008, to get the inside track on AdHaven (a new product 4INFO launched just prior to MWC that represents a rebranding of its entire suite of ad serving products) and where it fits into the roadmap.

By way of background, 4INFO’s strategy is about opening up its ad-serving technology to mobile operators and publishers to monetize their content with SMS text ads. The first step is AdHaven, a server that effectively provides publishers access to services including campaign management, ad sales and operations, and billing. Publishers can either sell their own ad inventory or go through 4INFO’s text ad network, which includes hundreds of premium publishers such as USA Today, Discovery Channel, MTV, E! Television Network, Evite, NBC, Maxim, ImpreMedia.

(I asked Zaw if 4INFO is on course for a head-on collision with JumpTap, which also sharpened its focus on premium content and launched a Premium Ad Network. His response: 4INFO has just launched with CBS and AOL, so there is some overlap in the strategy to focus on premium content. But there is no competition. “JumpTap is going after pure mobile Web traffic; we’re going after the traffic that is being created from SMS. It’s a fine distinction, but an important one.”)

The focus is on SMS (publishers can also choose from mobile ad formats such as click-to-call, click-to-video and click-to-the Web for text campaigns) but Zaw tells me “we’ll see AdHaven start to introduce other capabilities in the near future, where we’re [4INFO] not only serving ads in SMS, but we’re also helping publishers drive [traffic] from SMS content to WAP content, and then serve ads in those WAP content links as well.” To date the first commercial deployment of AdHaven is with VeriSign’s Messaging and Mobile Media division, a provider of SMS connectivity to more than 3 billion wireless subscribers, and its customers which include many leading corporate brands. Participating publishers can either sell their own ad inventory or participate in the 4INFO SMS Advertising Network.

My take: If we recall that 4INFO struck a trial mobile content and advertising deal with Yahoo last year, then it’s clear 4INFO is undergoing an exciting transformation that will ensure the company can compete with the major ad networks – if it decides to. But for the moment at least, the focus at 4INFO is on premium content and ways to deliver a consistent ad message across SMS and WAP content.

An excerpt from the Q&A:

Q: Let’s start with a high-level view of AdHaven and how it fits in.

A: The way that we really think about it [AdHaven] is it’s kind of like a Double-Click for SMS. But it does more than just SMS and I’ll get to that in a second. Previously, our ad-serving [offer] was only available if you were a publisher that used 4INFO connectivity. By that I mean,  in addition to your ad-serving solution, we were also your publishing platform that connected you to the carriers. Now, no matter where you are or the country you’re in, you can use AdHaven [for international reach] because 4INFO doesn’t currently support other carriers outside of the U.S. So that’s the big thing.

Q: What is the connection with VeriSign? They acquired a messaging company called m-Qube and I can imagine that they need a platform for their customers. Is there overlap or even competition?

A: For all of their [VeriSign] customers that don’t use the 4INFO platform and are using their [VeriSign's] aggregation tools, now all of those customers will have access to our ad-serving capabilities as well. We’re not in competition with the aggregators, so we’ll provide messaging when people want it, but we don’t ever see us getting into the aggregation business. VeriSign’s customers have certain sorts of enterprise requirements that, as part of the free public service from 4INFO, they may or may not receive. And so there’s always different levels of [service] that customers are looking to have. We have our own 4INFO traffic, but that’s a consumer-facing application. it’s not something that’s competitive to VeriSign’s enterprise messaging offering.

We don’t do interactive TV and voting and polling for large things like American Idol, because we’re just not set up to handle that as whereas VeriSign is. So now it means that those customers that have high bandwidth click-through requirements, with hundreds of millions of votes coming in, can now use these same sets of tools.

Q: So now you can go out to a company like SinglePoint, for example?

A: Yes, a company like that would be a customer for us.

Q: What else can you offer now that you have taken the wraps of AdHaven? Is it just about SMS?

A: You’ll see AdHaven start to actually introduce other capabilities in the near future where we’re not only serving ads in SMS, but  also helping publishers drive from SMS content to WAP content and then serve ads in those WAP content links as well.

Q: That’s where the ad networks are. Are you competing with them?

A: We’re not trying to be competitive with AdMob or Quattro or any of those guys. What we’re focusing on is being able to create more WAP traffic from our in-mobile web traffic, from our SMS traffic using AdHaven, and then being able to deliver a consistent advertising message in the SMS content and then the WAP content as well.

Q: I know from our past conversations that you understand the importance of targeting and relevancy. What are you doing about it?

A: Yes, we’re doing a lot in that direction. We’re a little bit careful of exactly what we disclose about our targeting algorithms; just given the competitive nature of the business. But I can say that if you look at where we’ve come from – from a standard ad-server that does campaign reporting – we can say we are ready to really start looking at behavioral type targeting. It has come a long way in the course of the last 6 months, and so have we.

Q: So it sounds imminent. Are you going to let me in on it?

A: Absolutely! When I’m ready to tell, you’ll be the first person I call.

Q: I’ll take you up on that one. While we’re on the topic of targeting and relevancy, I’m seeing less of an emphasis on mobile search, the capability that we thought was a pre-requisite for all this. The scenario was: You get the clues from the queries and deliver relevant ads. Now JumpTap is first and foremost an ad network, and other search companies have likewise changed their focus – and you didn’t mention it once in our interview…

A: The market is growing up. If we look at it from a JumpTap perspective; we see a carrier-centered model, one that I didn’t necessarily believe in. I definitely believe in the people in that company [JumpTap] and their focus on the advertising business. We [at 4INFO] are still big believers in the viability of search for consumers via free and open SMS and WAP and other methods, but we also understand that this is a point where mobile advertising is going to be a core piece of whatever comes out of search. We definitely still have our search business. We definitely still have our consumer-facing business. But, at the same time, you’ve got to make money, and we’re focused on making sure that we’re not only the leaders in search, but also the leaders in mobile media and technology; which I think search is a subset of.

Q: So it’s also ensuring growth through a more open approach?

A: Yes. Consumers are still absolutely able to use 4INFO for all the different services that you’ve seen before. Now the only difference is we don’t just do advertising of our own services. We provide advertising services for a huge number of different publishers; whether they are search or content or other types of alerts.

Q: Speaking of publishers, I see a strong focus on premium content publishers. Can you update me on how this is progressing?

A: We have a self-service platform for small publishers. and that’s our opened-up 4INFO.net.

For us though, we’re more interested in the short tail of premium publishers, high-quality content, and that’s what we focused our network on – not the more self-service, less interesting publishers. We just launched AOL and CBS on our network, and you don’t get much more premium than AOL or CBS.

Q: Of course, other companies are focused on premium content and publishers. I’m thinking here of JumpTap and its new Premium Ad Network…

A: There’s going to be competition for premium content. I’m [we're] not competitive with JumpTap. We are not looking to just take all of their run-of-the-mill mobile Web traffic. What we want to do is when a customer gets an SMS message and then clicks on a piece of content in that message to go to the mobile Web or video, then we’re creating that inventory – we’re creating new WAP inventory or mobile Web inventory and then we’re delivering a consistent advertising experience from the SMS message to the WAP message.

What you don’t want to have happen is:  Honda buys the SMS message and then sees Toyota on the WAP site where they’re directly trying to target that user. So it’s not competitive to what JumpTap is doing. They’re going after pure mobile Web traffic. We’re going after the traffic that’s being created; that we’re creating from SMS. It’s a fine distinction, but it’s an important one.

Q: What are some of the numbers? Nielsen named you the number one in SMS messaging, and your press release says: “The 4INFO advertising network of over 16 million users is ad-supported, with 4INFO customizing targeted, interactive SMS, WAP, and mobile video campaigns on behalf of its advertising partners and publishers. 4INFO delivers over eighty million real-time, user-requested answers and alerts via text message per month.” What can you add?

A: This year we’ll send over 2 billion SMS messages. We also will create from that SMS traffic, a little over 2 billion WAP impressions and video and mobile web impressions. So from there, we’ve grown into a pretty big network.

Q: A while back the discussion was that all this messaging is effectively costing more than it is bringing in…

A: No, not at all. We have fixed rate costs for all of our messaging services. Obviously, there’s no ad-serving. We don’t license any technology… all of this is built in-house. So no, the reality is if you understand our business, you understand it’s a business with huge operating leverage and stability to be a 60-70 percent gross margin-type company.

Q: What about the advertising experience. I have spoken with Taptu, a mobile search company that is thinking about the Touch Web and the new forms of advertising it enables. So it’s not just going to be text going forward. Again, the iPhone changes everything – including advertising. Does this present a challenge?

A: No, our belief in mobile advertising is that it’s delivering the best consumer experience possible. So if you’re on an iPhone or on a smartphone and you can get rich media video, then we’ll absolutely deliver that to you. And I talked a little about how AdHaven is going to be not just including SMS advertising, but also helping publishers drive WAP content from mobile Web content or iPhone content from that SMS content, and then serving ads there as well. So we see the better that phones get; the more interactive they get; the richer media they get, the easier it will be for us to then deliver sites in motion for our advertisers. So we’re all for smartphones and, as we continue to adapt with the markets, you’ll see us do more with rich media in the U.S. and less internationally where it’s less prevalent.

Q: What is the competitive landscape out there shaping up like? I know of a lot of other companies that insert ads into text, for example.

A: I think there’s going to be some companies coming out there and hey, let them come. The more in the market, the better the experience we’re all going to have. We think of ourselves as the 800-pound gorilla in the SMS space, and we think we’ll be the 800-pound gorilla in the mobile advertising space and that’s where we’re headed. But the more people that are educated in the market that are in the market, the better. There’s not just room for one person.

Q: What are the drivers? In Europe we see that companies like Blyk don’t just offer ads for free minutes, they have harnessed SMS to start brand conversations…

A: Europe has primarily a premium model and I think there’s now a place; now that the advertising market has matured to the point where the large U.S. advertisers and agencies that have global reach understand how to use mobile advertising better. We’ve got over 200 brands that ran on the platform in 2008.I think you’ll start to see more of that in Europe, which is why we’re releasing AdHaven for international so that there can be a mix of that premium and free model; a mix of that giving away free mobile marketing content for a subsidy model. And we’ll bring all of our large agency partners and brand partners in the U.S. over to some of the existing European and Asian operations.

Tags: 4INFO, JumpTap, Mobile Advertising, mobile analytics, Nielsen, SMS Search, ThinkMobile

This entry was posted on Wednesday, March 11th, 2009 at 5:49 pm and is filed under Mobile Advertising, Mobile Research, Mobile Search. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.